Where Is The Profit In Variable Data Digital Printing? Part 1

by George J. Whalen October 13, 2003 -- Since the advent of toner-based digital presses, marketers have endlessly repeated the mantra that this new technology would cause digital printers' businesses to boom, because it brings variable data printing (VDP) capability – the ability to change the content and personalize each piece being printed with every turn of the cylinder. But, over the past decade, VDP seems to have provided more press releases, editorial ink and seminar sales than tangible profits for digital printers in the commercial printing market. The picture of VDP that has been painted again and again by marketers has been of an always-coming commercial printing market, in which there will be strong demand for full-color materials, personalized during the printing process so that individuals receiving the materials will get 100% relevant content that addresses their personal needs, interests, ambitions, desires, physical attributes, preferences, buying behavior, or any other characteristics that can be collected, entered into a digital database, stored, retrieved and output through a digital printing press. A nice image, to be sure, but unfortunately that picture has been repainted so often, it's starting to crack and flake. Sources say a majority of digital commercial printers have never made use of the variable data capabilities of their digital color presses, and few plan to do so in the future. Does this mean that VDP is a failure? Let's look at possible answers. Possibilities It's axiomatic that merely being capable of “doing something” does not necessarily imply that an immediate commercial success will follow. A case in point: The Wright brothers first demonstrated powered flight at Kitty Hawk, NC USA on December 17, 1903, by flying for 59 seconds over a distance of 859 feet. The media gushed and speculations about the future of flying were rampant -- but no one immediately organized an airline. So, just because a toner-based digital press can print a new image with each turn of the cylinder -- making variable data printing possible -- does that mean there must be a stampede of buyers who want that commercial printing service? There apparently is no such relationship. Is it also conceivable that a very long path to commercialization might simply have become the fate of VDP in commercial printing? Could the path from invention to commercialization have been so arduous and intense as to have delayed arrival at the “promised land” of VDP in commercial printing for more than 10 years? Or, were the digital press marketers simply talking through their hats? Is there another possible answer -- that VDP, even though performed with a digital printing press, simply doesn't “fit” into the commercial printing picture, at all. Rather, that VDP makes a much better fit into other kinds of businesses, which specialize in providing marketing communication and customer relations management solutions to clients. Now, that is a distinct possibility and there's some evidence that it's the correct answer. Trendwatch Graphic Arts VDP Study The latter new insight, the notion that VDP more properly belongs in a new form of business that is wider in scope than commercial digital printing, has most recently surfaced in a just-released study, entitled Variable Data Printing: The Competitive Environment, published by Trendwatch Graphic Arts (TWGA) 1 . This 124-page report analyzes the past 10 years of VDP and notes that it has passed through a “prolonged experimental phase” in the digital printing sector of the commercial printing industry. (That may simply be a nicer way to say that VDP never seemed to catch-on there.) After the initial “gee-whiz” response to VDP, digital printers seeking to make money with it found they had to climb a very steep learning curve about lists, databases, information technology (IT), high-speed RIPs, how to use VDP, and most importantly, who is a prospect for VDP? How to go about approaching them? What to offer them and how to price it? All this has proven to be quite a bit more than the digital commercial printing business they were used to. Instead, VDP has proven to be a very different kind of business. Like an iceberg, only 10% of VDP's challenges initially show at the surface. The 90% that can sink a digital printer lies below, hidden in the murky depths of printer inexperience. Only after printers have embarked on VDP jobs do they discover how “different” it is from “regular” digital printing. But, by then, it can be too late to prevent losses. First, VDP is a “custom marketing business,” founded on being able to get incredibly accurate database lists to drive the VDP personalization process. Second, it requires high, in-house expertise in IT, a fast digital data network, plus prepress software and fast RIPs capable of composing personalized color pages in an eye-blink. Third, it requires a crack, consultant-level sales force. Why? Because VDP prospects need education, help and hand-holding in understanding how to use VDP to best advantage. And, fourth, there is “the competition” – other means of creating personalized messages and getting them in front of the client's prospective customers via the Internet and e-mail. These are reasons enough for VDP's slow-growth in commercial printing, but there is one more: few-to-no success stories have appeared in the industry press about digital commercial printers “getting rich” with VDP. Why? Because every VDP job is essentially “unique” -- as well as an experiment – so industry magazines having a large commercial printer readership with similar interests tend to see little value in publishing features about one digital printer's offbeat success in producing a unique VDP job, whose like will probably never be seen by its readers. So, why bother? And, since nobody ever publicizes failures, printers never read about one another's VDP mistakes. So, printers new to VDP just repeat the same errors, learning by trial-and-error. Ultimately, the steepness of the VDP learning curve causes most of these printers to turn back from personalization work. Competing Methods And Costs Consider, too, the highly competitive alternative to VDP, of personalizing high-quality offset color pre-printed pages by passing them through a monochrome digital press. The result costs less and may look better than a VDP job. Digital color has long been considered “pleasing color,” and though there have been improvements, where “color quality” is a key issue, the bias has been away from using digital color and toward pre-printed offset color. Now, let's look at the cost of producing a “mistake” with VDP. Because VDP is very demanding of a perfect list database, any “glitch” in the list will result in a printed mistake that is at best unacceptable, and quite possibly, offensive to the recipient. Imagine receiving a VDP-produced brochure in which one letter is misplaced in every appearance of your first name? What would be your reaction? The cost-per-piece of VDP-produced color material can easily run $2 to $3 per piece, so mistakes caused by a list with errors like that would prove painful. On the other hand, costs of a mistake with competing personalized direct-mail marketing letters or e-mail messages will rarely cost more than a few cents. The amount at-risk is one of the iceberg factors that makes VDP a much-higher-stakes game than many commercial printers foresee. For all of these reasons, acceptance of VDP in commercial printing quarters has been slow. Not the least of the reasons has been the upsurge of Internet marketing and e-mail marketing. Both offer virtually free message delivery over wide areas, plus the capacity for near-instantaneous response. An unprece-dented degree of content, interactivity and animation are also now possible, thanks to advances in HTML, Java, and browser software. These present formidable competitive barriers to use of VDP. Next week: The New Breed: Finding Success with VDP 1 The TWGA report cited herein may be purchased from Trendwatch Graphic Arts, a unit of Reed Business Information, through its web site: www.trendwatchgraphicarts.com.